Monthly income exceeded 500 million!

You may have seen profitable companies, but you must have never seen such a profitable business - at the JPMorgan Healthcare Conference, the British digital medical veteran Babylon Health (Babylon for short) that just landed on Nasdaq in October 2021 Announced strong performance - expected to achieve revenue of US$80 million (equivalent to approximately RMB 500 million) in January 2022 alone, and raised the upper limit of full-year revenue target to an astonishing US$1 billion (equivalent to approximately RMB 500 million) 6.
4 billion)!

Is Babylon's astonishing goal "courage given by Liang Jingru", or after careful consideration, what is the support behind it? Arterial Network has interpreted this, hoping to be a reference for the industry
.

Babylon's 'Versailles' makes people jealous

Babylon's 'Versailles' makes people jealous

According to public information, Babylon has just completed a pay-for-value medical service agreement in the United States
.

This will bring it 88,000 new members and bring its projected January 2022 revenue to $80 million

At the same time, Babylon has also made a preliminary assessment of its annual revenue for 2021, and expects that the full-year 2021 revenue will reach its previously set target of $321 million
.

Based on signs of optimism from this information, Babylon announced that it has raised its 2022 revenue forecast to $900-100 million

2022 revenue is expected to grow by a full 40%, which is about three times the expected revenue in fiscal 2021

Such substantial performance growth expectations have made Babylon founder and CEO Ali Parsa "Versailles" - he said that although Babylon's continued growth in the health care field seems extraordinary, it is actually comparable to Amazon, Internet It is no different from the high growth levels of many well-known disruptive digital innovators such as Netflix, Tesla or Airbnb during their start-up years
.

Revenue growth trends of Amazon, Netflix, Tesla and Airbnb (screenshot from Babylon's public documents)

Although this may seem modest, from the comparison data, Amazon, Netflix, Tesla and Airbnb have a 4-year revenue compound growth rate of 59%, 74%, 126% and 146%
.

So, how does Babylon, which has had income since 2018, perform on this indicator?

Babylon's revenue growth trend far outpaces other innovative companies

In 2018, Babylon earned $8 million in revenue
.

A year later, in 2019, its full-year revenue reached $16 million, an average annual increase of 102%

This indicator is 3.

Comparison between Babylon and the industry average (screenshot from Babylon's public documents)

If compared with the same industry, Babylon's growth rate is even more amazing
.

Its 2020-2022 revenue compound annual growth rate is as high as 199.

The compound annual growth rate of revenue from 2020 to 2022 is as high as 199.

The digital "pyramid" service systemendows Babylon with "banknote capability"

Why is this company making so much money? Babylon's distinctive service system is probably one of the most important factors
.

Babylon's service structure is slightly different from other telemedicine companies, and the overall service forms a "pyramid" structure

Babylon's digital "pyramid" service system

The base of the "pyramid" is based on a mobile app to achieve self-management of users' health
.

Mobile applications can collect members' health data from multiple dimensions and introduce artificial intelligence to create personalized health goals for members and track their progress

This level is critical for Babylon
.

Through the assessment of digital tools, Babylon can help members understand the status and trends of their health indicators; at the same time, most importantly, risk stratification of service groups
.
After that, Babylon can intervene in advance with reminders or set health goals for members to keep members as healthy as possible and prevent their health from worsening
.

The Babylon Personal Health Assistant is a second tier that helps members meet their medical needs and provides lay physician support through chatbots or human interaction
.

Babylon's personal health assistance includes a more comprehensive symptom check function
.
Members can answer questions about their symptoms and be directed to possible matches
.
In this way, members can obtain correct information as soon as possible when they are sick, such as knowledge of medicines and nursing care, so as to realize self-examination and self-treatment of the disease
.

If user needs are still not met and professional medical staff is needed, Babylon will introduce clinical services provided by professional medical staff
.
Babylon begins with access to 24/7 teleclinical consultations, allowing members to communicate with healthcare professionals to address their urgent or chronic needs
.

Most members' medical health needs can be addressed in the above manner, but when members do require face-to-face medical care, Babylon also provides face-to-face medical care
.
If face-to-face medical services still can't solve the member's problem, Babylon will transfer it to a third-party partner medical institution, which will provide users with a full range of medical care
.

Once a user is fully recovered, Babylon leverages digital capabilities to provide a wide range of follow-up care, including medication management, nursing and recovery advice, to ensure members are maintaining their best health – after all, as long as members are healthy, their Membership fees will be turned into Babylon's profits
.

Babylon's financial data in recent years (data from Babylon's prospectus, arterial network mapping)

Babylon posted $120 million in revenue in the first half of 2021, with an actual loss of $75.
7 million
.
Losses are expected to narrow further as full-year projected revenue tops $300 million
.

Babylon's prospectus also shows us the specific composition of its revenue
.
Currently, Babylon's main source of revenue consists of three parts: pay-for-value medical services, clinical services and software licenses
.

The overall composition of Babylon's revenue (data from Babylon's prospectus, arterial network mapping)

Pay-for-value medical services have become Babylon's most important source of revenue in recent years, and its proportion in Babylon's revenue has increased from 32.
9% to 51.
6%
.
In this way, Babylon makes a profit by cooperating with health care organizations to collect a fixed capitation fee and provide corresponding medical services to members participating in the corresponding health plan, by keeping the cost lower than the actual cost
.

To achieve cost reductions, Babylon enhances member chronic disease management through proactive, preventative care to keep members healthy and avoid unnecessary emergency room visits and hospitalizations
.
At the same time, take advantage of the continuous application of digital technology to reduce costs and better manage member health
.

Most of the time, these services can guarantee Babylon's profitability, but do not rule out the occurrence of individual surprises
.
As such, it also insures all pay-for-value medical service contracts with a “stop loss”—insurance that comes into play should any individual patient spend more than expected by a threshold
.
These stop-loss insurances cost only a few percent of their revenue
.

At present, Babylon has built one of the largest pay-for-value medical service networks in the United States, and its coverage is rapidly expanding, including BNP Paribas, HSBC, Shell Oil, and BuzzFeed are its customers
.
Its prospectus shows that on September 30, 2021, its pay-for-value medical services still had only about 100,000 members
.
But by January 2022, the service network already had as many as 440,000 members, which has more than quadrupled in just three months
.

By January 2022, this service network already has as many as 440,000 members, an increase of more than 4 times in just 3 months

These services are popular in part because they can effectively reduce medical costs
.
Babylon has published peer-reviewed research in the Journal of Medical Internet Research
.
The study, which looked at emergency services in North West London between April 1, 2018 and March 31, 2019, found that Babylon services saved its members up to 35% in emergency costs
.

In addition, the British NHS commissioned Ipsos MORI to conduct research on Babylon services
.
The survey looked at emergency room visits by members over a two-year period, one year before joining the service, and one year after joining the service, and found that Babylon's service can reduce emergency room visits by 25 percent
.
Considering the outrageous cost of emergency services abroad, it is understandable that Babylon is sought after by both employers and employees
.

Babylon's clinical services are tailored to the client's needs, but all have full access to a full range of digital health solutions, including app-based suites and consultations with healthcare professionals
.
This service uses a mix of pay-per-project and pay-per-capita
.
In the UK, for example, Babylon users can choose to pay £49 per consultation, or £149 for an annual fee of £149 for unlimited consultations
.
If a member needs a physiotherapist, Babylon charges £25 for members and £35 for non-members
.

Returning to Babylon's "pyramid" service system, pay-for-value medical services are at the bottom of the pyramid, and clinical services are at the top of the "pyramid"
.
Clinical services used to be Babylon's largest revenue generator until 2021
.
However, as Babylon has signed more and more pay-for-value contracts for medical services, clinical services have significantly reduced their share of revenue
.

According to the data disclosed in the prospectus, its clinical services will achieve revenue of US$28.
631 million in 2020 and US$18.
134 million in the first half of 2021
.
Considering that the population it covers has quadrupled in half a year, the growth rate of clinical service revenue is much lower, and the proportion is greatly reduced
.
This may also indicate that pay-for-value medical services are playing a "gatekeeper" role, allowing more situations that may otherwise evolve into clinical services to be addressed at an early stage
.

Software license basically refers to the cloud platform license provided by Babylon for medical institutions and payers
.
Babylon, for example, has a seven-year licensing agreement with Telus Health in Canada, allowing Telus to use Babylon's platform, but provide services under the Telus brand
.

AI-based digital medical capabilities are the engine of Babylon's "money printing machine"

AI-based digital medical capabilities are the engine of Babylon's "money printing machine"

While Babylon was in Versailles, it did not forget to compare other similar companies to illustrate its uniqueness
.
Compared with common telemedicine companies such as Teladoc and Amwell, Babylon's services are more scalable and can provide broader and more flexible medical services, rather than being limited to a certain professional field
.
At the same time, this also enables Babylon to obtain better customer revenue
.

Teladoc expects to generate $2.
03 billion in revenue in 2021 and plans to hit $2.
6 billion in revenue in 2022
.
From the data point of view, Babylon is still relatively weak
.
However, Teladoc's revenue is highly dependent on the number of covered members, which is also the main reason for its aggressive acquisition and expansion since its establishment
.
However, this growth has slowed considerably in recent years, with its domestic membership in 2021 increasing by only 2% compared to 2020
.
So Babylon's claim that it has better profitability isn't groundless
.

Although digitally empowered healthcare companies such as Livongo (acquired by Teladoc) and One Medical have strong profitability, they still appear in physical form and have some deficiencies in digital capabilities
.
Digital technology is at best a technical enabler for these businesses, not a top-priority strategy
.
Due to the lack of end-to-end technical capabilities and the adoption of an asset-heavy entity model, its business scalability is relatively less and slower
.

Babylon's digital solutions are everywhere, allowing it to provide fully integrated, personalized healthcare and access across the care spectrum
.
Members are able to access “24×7” on-demand care through its digital platform, as well as local medical services through third-party contracted medical institutions, demonstrating advantages in scalability and flexibility
.

For example, Babylon worked with Home State Health to quickly complete coverage when it entered Missouri, USA
.
Leveraging its digital capabilities and existing local healthcare services to serve approximately 17,000 members with limited incremental investments
.

Compared with the industry, Babylon's model is more characteristic (screenshot from Babylon's official public document)

Therefore, relatively speaking, Babylon combines the advantages of two types of enterprises, with strong profitability and strong expansion ability
.
Ultimately, Babylon's technological strengths are the key to its ability to bring them together
.

Babylon has accumulated many years in artificial intelligence
.
In 2018, Tencent also cooperated with it in the field of artificial intelligence
.
At present, Babylon has a team of more than 750 people in three places around the world to develop artificial intelligence, and the cumulative investment in the technology in the past three years has exceeded 300 million US dollars
.

These investments made a huge difference
.
According to the test, Babylon's artificial intelligence is close to that of general practitioners with a moderate level of disease judgment, and 48% of Babylon's current business can be handled by artificial intelligence assistants
.
These digital solutions, in turn, can provide massive amounts of data for AI to learn from to further improve algorithm accuracy
.
In addition, 84% of medical services are done virtually online
.
This makes the cost can be strictly and precisely controlled
.

Babylon has successfully turned these strengths into customer satisfaction—its user service retention rate exceeds 95 percent, and about 90 percent of its users give its app a 5-star rating
.
In the first half of 2021, Babylon helped a patient every 5 seconds and generated approximately 1.
7 million AI interactions and 1.
3 million consultations
.

The European benchmark for innovative medical care,

The European benchmark for innovative medical care,

An Iranian-founded British company goes public in the US

An Iranian-founded British company goes public in the US

In order to seek further development, Babylon will also be launched in 2021
.
In June 2021, it announced that it would enter into a definitive business combination agreement with SPAC company Alkuri Global Acquisition Corp.
(Alkuri)
.
In October, the two companies completed a $4.
2 billion merger
.
The new merged company operates under Babylon and is listed on the Nasdaq under the ticker symbol "BBLN"
.

A $4.
2 billion merger

So far, the British company, founded in 2013, has completed the first phase of its life
.

Compared with similar companies, Babylon's IPO pace can be described as light speed - you must know that it took 13 years from the establishment of Teladoc, the first telemedicine stock, to its listing in 2015
.
Teladoc's main competitor, Amwell, was founded in 2006 and finally went public in 2020, taking 14 years
.
By comparison, Babylon only took eight years
.

It only took 8 years

Such a rapid pace is even more commendable when one considers the location of its company
.
As we all know, the market environment and regulatory environment faced by European medical companies are very different from those in the United States
.
Although there is a unified framework of the EU, each member state has its own unique requirements
.
This multi-national situation makes the development of European start-ups often face multiple constraints
.

Just to take online medical care as an example, France did not pass a law allowing medical diagnosis and treatment to be provided online until the end of 2018
.
In August 2019, Germany only made it legal to provide medicines without going through a doctor's visit
.
Relatively speaking, the UK is more open among European countries and encourages innovation; coupled with the UK’s strong position in global finance, the UK’s digital healthcare companies have achieved better development
.

Nonetheless, Babylon is clearly aware that its rapid development requires a market boost with a better regulatory environment
.
As a result, Babylon has operated globally from the very beginning, with Babylon's imprint in North America, Europe, Asia and even Africa
.
This is one of the factors that sets it apart from other European digital health businesses
.

This global vision comes in part from its founders
.
Ali Parsa, the founder of Babylon, is an Iranian serial entrepreneur who started his business in 1990 to pay for academic research expenses while studying in London, and has successively founded a number of enterprises
.
In addition, he also has experience in the financial industry, having worked at Credit Suisse and Goldman Sachs for two years
.

These elements have put Babylon in the spotlight among European digital health companies
.
Some good people have roughly sorted out the top 14 digital health start-ups in Europe in 2019.
Babylon received a single financing of 550 million US dollars in 2019, which exceeded the total financing of the rest of the companies on the list
.

Received $550 million in a single financing in 2019, more than the total financing of the rest of the list

Investment and financing of Babylon over the years (arterial network mapping)

In addition to the status of high-quality and scarce targets, another reason why Babylon can be listed so quickly is because of the popularity of SPACs in recent years
.
As interest rates in the capital market continue to fall, the increasingly large currencies cannot match enough high-quality assets, and new tools need to be explored, which has driven the number of SPAC IPOs and the amount of financing to hit new highs
.
Among them, professional SPACs serving the medical and health field appeared a little later, but developed rapidly
.

In 2021, a total of 613 SPACs will be listed on Nasdaq, raising a total of $145 billion, an increase of 91% over 2020
.
In 2020, the number of Nasdaq SPAC listings (248) exceeded IPOs (223) for the first time; in 2021, the number of SPACs far surpassed the 420 IPOs with 613 - SPACs have become mainstream
.

The listing provides a good foundation for Babylon's further expansion
.
In its strategic vision, it will expand the company's business in the future by expanding the coverage population and service scope of existing markets, and expanding into new markets through new customers and existing customers
.
This will depend on the adoption of two means, one is strategic cooperation and acquisition; the other is continuous investment in technology
.

In terms of strategic cooperation and acquisitions, Babylon has been quite active in the past two years, frequently carrying out cooperation and acquisitions
.
Judging from its acquisition, the main purpose is to expand business coverage
.
For example, the most recent acquisition occurred on December 31, 2021, when Babylon acquired Higi
.
The company has 10,000 FDA-approved Smart Health cabins in retail chains such as Sam's Club, Kroger, Rite Aid and Publix
.
According to statistics, approximately 73% of the U.
S.
population lives within five miles of Higi Station, and more than 61 million people have accumulated more than 372 million biometric tests using its health hut
.
This will help Babylon expand its reach and provide members with a more comprehensive solution
.

Babylon's acquisitions and investments over the years (arterial network mapping)

In terms of technology, Babylon has been investing continuously
.
Its 750-person R&D team in the UK, the US and India accounts for more than a third of its 2,200 employees
.
In the past three years, Babylon has invested $300 million in technology research and development
.
As Babylon's revenue increases, its investment in research and development will further expand
.

write at the end

write at the end

Compared to other telemedicines, Babylon is somewhat of an outlier
.
It is more focused on technology, and is also one of the early pioneers and benchmarks of artificial intelligence applied to the medical and health field
.
Based on this, Babylon gradually built a "pyramid" service system, and attracted cooperation in the form of pay-for-value, that is, the per capita rate
.

With the leadership of this model and underlying technology, Babylon's development has accelerated significantly in recent years
.
Although the new crown pneumonia epidemic has indeed boosted it, it is undeniable that Babylon has also found common pain points in the market covered by it, such as high emergency costs and difficulty in making appointments for medical services
.

The success of Babylon has also been learned by the domestic Internet medical industry recently.
There are already Internet medical companies exploring the provision of full-process medical care and health maintenance services for residents, and exploring the development of "payment by disease and per capita" under the total budget of medical insurance.
payment method
.
At the same time, there are also Internet medical companies that are empowering themselves with digital capabilities by developing scalable, AI-based digital therapies to gain an edge over the competition
.

Of course, it remains to be seen whether Babylon's success is sustainable in the long term
.
But at least, it has made its own exploration with the original intention of using digital technology to change medical care for the better, as its founder Dr.
Ali Parsa said, "Our mission is to make high quality healthcare, regardless of their geographic location, economic status or social class”
.